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How to save for your home’s down payment

Business, finance, savings, property ladder or mortgage loan concept : Flat lay or top view of wood house model and coins scattered from glass jar on open blank notebook paper

Saving up enough money for a down payment is the first major challenge in the home buying process. However, contrary to initial perceptions and discouraging statistics, finding the money for a down payment doesn’t have to be an eternal slog.

Save smart and put down money for a home sooner than expected with these tips below.

  1. Check out federal, state, and city programs

    Uncle Sam offers down payment assistance programs at all levels of government. You may qualify for these based on your location, income, or both.

    For example, North Carolina offers assistance to first-time and move-up homebuyers through its NC Home Advantage Mortgage and NC 1st Home Advantage Down Payment programs. The former gives out down payment assistance of up to 5% of the loan amount while the latter entitles buyers who meet the criteria with $8,000 in assistance.

    The city also offers support through its HouseCharlotte program. This particular initiative provides $7,500 in down payment for families who are purchasing a home within city limits and taking in between 80 and 110% AMI (area median income).

    There are also government programs that make no exclusions. This means that you can qualify for two or more housing assistance programs, thus significantly reducing your out-of-pocket costs.

  2. Talk to HR about your options

    Aside from looking into direct government assistance, ask your employer about Employer Assisted Housing (EAH) programs they’re partnered with. These programs are generally offered to people who earn 80% or less of the AMI in their location.

    PRISMA in Greenville, NC is one of a handful of employers in the state that offers homeownership assistance to its employees through down payment and closing costs assistance.

    Even if your employer isn’t part of an EAH program, they might still have internal incentives that can help you save enough for a reasonable down payment amount.

  3. Live smaller

    It’s common practice to pare down expenses here and there once monthly mortgage payments come into the picture. However, most people don’t think to do it as soon as they start wishing for their own home.

    If you’re still renting, consider moving to a smaller apartment to redirect part of your rent money into your savings. It’s a big compromise but it will get you closer to your target down payment much faster.

    If you’re already paying for mortgage, look for savings elsewhere in your budget. Apart from rent or mortgage, the average American household’s next largest expenses are food, transportation, and entertainment. You can save on costs by considering any (or all) of the following:

    • eating out less
    • reevaluating your grocery list
    • taking public transportation whenever possible
    • biking or walking short distances
    • downgrading cable or streaming service plans
  4. Make saving mindless

    Technology can be a great ally when you’re saving up. It lets you factor yourself out of your savings equation and save consistently and faithfully.

    Contact your bank about automatic savings plans. If they offer plans, you can arrange for a fixed percentage of your salary to be whisked away to a savings account as soon as your paycheck comes in.

    Or, download a savings app to save in unique ways. The app Qapital, for example, allows you to “trigger automatic saving” with different rules, such as rounding up expenses and saving the difference or penalizing excessive tweeting.

Have enough saved up for a new home? Contact me, Valarie R. Brooks, to get an experienced and expert Realtor in Charlotte, NC on your side. You can reach my team today at 704.488.5458 or send an email to Valarie(at)ValarieRBrooks(dotted)com.